The June 23, 2009 figure for Existing Home Prices indicates vaues have fallen to 4.77M which is lower than the anticipated 4.82M. This is good news for mortgage bonds which is in turn good for interest rates but bad for the economy as a whole.
In associated news, the NAR (National Association of Realtors) has reported a 5% cancellation in purchase contracts resulting from a meriad of problems with the new HVCC appraisal law since it's inception May 1st. Low property valuations, long turn around times and increased fees have all resulted from the HVCC (Home Valuation Code of Conduct). This has also affected refinance transactions. Appraisal management companies have been using inexperienced appraisers and appraisers not familar with specific markets which has contributed to the problem.
If you read my earlier post you will see that this is pretty much what I forecasted would happen. This bill is unnecessary for reasons I mentioned in the earlier post.
Pressure is being brought to bear to have this bill overturned. You may have been lucky enough not to have been affected by this yet, but you will be. Click on this link http://www.hvccpetition.com/ and sign the petition to help overturn the HVCC.
Tuesday, June 23, 2009
Wednesday, June 3, 2009
FHA $8,000 Tax Credit Down Payment Assistance
I don't usually like to post more than once a week but I know there is some interest in this program.
The FHA has just passed the bill that would allow first time home buyers to have the ability to use the $8,000 tax credit for the 3.5% down payment. There are various restrictions that apply and the actual approved FHA mortgagees still have to determine how they will implement the program. There are still some ambiguous areas that have to be ironed out as to who will actually loan the money and what the terms might be. We don't know exactly when this will become fully integrated but it does look like it will really become available at some point.
We will update as more information becomes available.
Stay tuned
The FHA has just passed the bill that would allow first time home buyers to have the ability to use the $8,000 tax credit for the 3.5% down payment. There are various restrictions that apply and the actual approved FHA mortgagees still have to determine how they will implement the program. There are still some ambiguous areas that have to be ironed out as to who will actually loan the money and what the terms might be. We don't know exactly when this will become fully integrated but it does look like it will really become available at some point.
We will update as more information becomes available.
Stay tuned
Monday, June 1, 2009
Your Credit Score May Cost Up to 2.5 points!
I had a disturbing situation come up recently for the first time on a conventional loan.
When applying for a mortgage a "tri-merge" credit report is ordered by the loan officer. Each borrower receives 3 credit scores, one from each credit repository, Trans Union, Equifax and Experian. The underwriter throws out the high and low scores and utilizes the middle score when determining credit worthiness. In the past a middle credit score of 620 was deemed acceptable as the minimum requirement.
In 2008 Fannie Mae and Freddie Mac were both near insolvency and as I am sure many of you are aware, the Federal Government stepped in and purchased both companies.
A decision was then made last year that going forward on any conventional loan borrowers could be subject to a potential fee in the form of points depending on their credit scores. This is referred to as either a "Loan Level Price Adjustment or "Risk Based Price Adjustment"
Recently that fee has been increased. Today, on a conventional loan and a credit score under 740, the borrower will be subject to paying points.
Here is an example. Say the borrower has a mid score of 673 and is putting down 20%. They will be charged 2.5 points! On a $200,000 loan that is an additional cost of $5000! If the middle score was higher at 680, it would STILL be 2 points.
This is ridiculous when a borrower is putting down 20%. How many borrowers today have 20% for a down payment?
This does not apply to government loans such as VA , FHA USDA, only conventional loans.
Don't be surprised when a borrower is told an ADDITIONAL $4000-$5000 will be needed for closing costs.
Usually someone who has shaky credit does not apply for a conventional loan. They apply for a government loan where if they have a 660 score there is no hit for the credit score. Under 660 down to 620 there is a hit but it is 1/4 point.
The main issue here is if someone has 20% for a down payment they would be better served with a conventional loan because there would be no PMI. With an FHA they would still have PMI and the UFMIP of 1.75%.
When applying for a mortgage a "tri-merge" credit report is ordered by the loan officer. Each borrower receives 3 credit scores, one from each credit repository, Trans Union, Equifax and Experian. The underwriter throws out the high and low scores and utilizes the middle score when determining credit worthiness. In the past a middle credit score of 620 was deemed acceptable as the minimum requirement.
In 2008 Fannie Mae and Freddie Mac were both near insolvency and as I am sure many of you are aware, the Federal Government stepped in and purchased both companies.
A decision was then made last year that going forward on any conventional loan borrowers could be subject to a potential fee in the form of points depending on their credit scores. This is referred to as either a "Loan Level Price Adjustment or "Risk Based Price Adjustment"
Recently that fee has been increased. Today, on a conventional loan and a credit score under 740, the borrower will be subject to paying points.
Here is an example. Say the borrower has a mid score of 673 and is putting down 20%. They will be charged 2.5 points! On a $200,000 loan that is an additional cost of $5000! If the middle score was higher at 680, it would STILL be 2 points.
This is ridiculous when a borrower is putting down 20%. How many borrowers today have 20% for a down payment?
This does not apply to government loans such as VA , FHA USDA, only conventional loans.
Don't be surprised when a borrower is told an ADDITIONAL $4000-$5000 will be needed for closing costs.
Usually someone who has shaky credit does not apply for a conventional loan. They apply for a government loan where if they have a 660 score there is no hit for the credit score. Under 660 down to 620 there is a hit but it is 1/4 point.
The main issue here is if someone has 20% for a down payment they would be better served with a conventional loan because there would be no PMI. With an FHA they would still have PMI and the UFMIP of 1.75%.
Subscribe to:
Posts (Atom)
Posts
